Advertising

Public relations

Sales promotion

Personal selling

Ambient ads

Press releases

Exhibitions

Sales calls

Press ads

Corporate identity

Telesales

TV ads

Telemarketing

Database marketing

Radio ads

Internet marketing

Outdoor ads

Transport advertising

Inside transport

Outside transport

Chapter 2. Advertising

________________________________________________________________

The first advertising agencies did not create ads; these firms were media brokers who earned a living by charging a fee in return for negotiating rates with newspapers for placing other people’s messages. As magazines began to come on the scene, they helped companies to prepare their ads and create more elaborate messages backing them up with attention-getting artwork and photos. Eventually, they formed agencies and grew closer to the advertisers than to the media.

Advertising now is big business, to say the very least. Expenditures in the United States totaled $147 billion in 1994. This amounts to approximately $564 in advertising for each of the nearly 261 million men, women, and children in the United States as of 1994. By comparison, the next largest advertising expenditure per capita is in Japan at approximately $277.

Some American companies invest over $1 billion a year on domestic advertising. In 1993, for example, Procter & Gamble spent $2.4 billion; Philip Morris, $1.8 billion; General Motors, $1.5 billion; and Sears, Roebuck & Co., $1.3 billion; and PepsiCo invested $1 billion in domestic advertising. Even the U.S. government’s advertises to the tune of over $300 million. The government’s advertising goes to such efforts as military recruiting, the Postal Service, Amtrak rail services, the U.S. Mint (e.g., commemorative coins), and AIDS awareness.

2.1. Advertising Functions

These massive investments suggest that many firms have faith in the effectiveness of advertising. In general, advertising is valued because it is recognized as performing a variety of critical communications functions: (1) informing, (2) persuading, (3) reminding, (4) adding value, and (5) assisting other company efforts.

Informing. Advertising makes consumers aware of new products, informs them about specific brands, and educates them about particular product features and benefits. Because advertising is an efficient form of communication, capable of reaching mass audiences at a relatively low cost per contact, it facilitates the introduction of new products and increases demand for existing products, largely by increasing consumers’ top of mind awareness (TOMA) for established brands in mature product categories.

Persuading. Effective advertising persuades customers to try advertised products. Sometimes the persuasion takes the form of influencing primary demand – that is, creating demand for an entire product category. Most frequently, advertising attempts to build secondary demand, the demand for a specific company’s brand.

Reminding. Advertising keeps a company’s brand fresh in the consumer’s memory. When a need arises that is related to the advertised product, past advertising impact makes it possible for the advertiser’s brand to come to the consumer’s mind as a purchase candidate. Effective advertising also increases the consumer’s interest in a mature brand and thus the likelihood of purchasing a brand that otherwise might not be chosen. Advertising, furthermore, has been demonstrated to influence brand switching by reminding consumers who have not recently purchased a brand that the brand is available and that it possesses favorable attributes.

Adding Value. There are three basic ways by which companies can add value to their offerings: innovating, improving quality, or altering consumer perceptions. These three value-added components are completely interdependent.

Innovation without quality is mere novelty. Consumer perception without quality and/ or innovation is mere puffery. And both innovation and quality, if not translated into consumer perceptions, are like the sound of the proverbial tree falling in the empty forest.

Advertising adds value to brands by influencing consumers’ perceptions. Effective advertising causes brands to be viewed as more elegant, more stylish, more prestigious, and perhaps superior to competitive offerings. Effective advertising, then, can lead to increased market share and greater profitability. It is little wonder why (as discussed in the opening vignette) the world’s largest advertiser, Procter & Gamble, fully appreciates advertising’s value-added role.

Assisting Other Company Efforts. Advertising is just one member of the marketing communications team. Advertising is at times a scorer that accomplishes goals by itself. At other times advertising’s primary role is as an assister that facilitates other company efforts in the marketing communications process. For example, advertising may be used as a vehicle for delivering sales promotions such as coupons and sweepstakes and attracting attention to these sales promotion tools.

Another crucial role of advertising is to assist sales representatives. Advertising presells a company’s products and provides salespeople with valuable introductions prior to their personal contact with prospective customers. Sales effort, time, and costs are reduced because less time is required to inform prospects about product features and benefits. Moreover, advertising legitimizes or makes more credible the sales representative’s claims.

Advertising also enhances the results of other marketing communications. For example, consumers can identify product packages in the store and recognize the value of a product more easily after seeing it advertised on television or in a magazine. Advertising also can augment the effectiveness of price deals. One study found that customers were more responsive to retailers’ price deals when retailers advertised that fact compared to when retailers offered a deal but did not advertise it.

Although the discussion has made it clear that advertising is an extremely important business function, perhaps especially in the United States, it is pertinent to note that advertising’s importance varies from country to country. This variance is not just in terms of advertising expenditures, but also in terms of consumer perceptions of advertising.